Egypt crony capitalism Palm Hills deal cancelled

Ahram Online + Reuters, Friday 8 Apr 2011

Facing corruption charges, the giant real estate developer Palm Hills, in which one Mubarak son is involved, has had a major land contract canceled by the governmental New Urban Communities Authority

Palm Hills
Palm Hills was partially owned by the former minister of Housing. (Photo File)

New Urban Communities Authority (NUCA) is cancelling a land contract with beleaguered property developer Palm Hills, financial daily Al Mal reported on Thursday.

"NUCA decided ... to cancel a contract for an allocated plot of land of 190 feddans ... in Sixth of October City to Palm Hills," Al Mal said, citing no sources.

It did not say whether the cancellation concerned land whose ownership is being contested under legal challenges that have hit several companies in Egypt's real estate sector.

No one from NUCA could immediately be reached for comment.

"The company earlier requested a cancellation of the deal and NUCA replied that it did not object," says a statement from Palm Hills published on Egypt's stock market website on Thursday, adding that the land is still under its possession.

"The option of returning land would help the company better manage its cash flow," reads the the statement. 

In March, a judicial panel concluded that a sale of land in another Cairo suburb to Palm Hills was illegal because it was priced too cheaply and said it should be scrapped.

Palm Hills shares have tumbled 59 per cent this year. Chief Executive Yasseen Mansour faces criminal charges of wasting public money.

The firm, which posesses the second largest land bank, has said plots of land being contested represented less than 7.5 percent of its total land bank but analysts say it faces mounting debt and liabilities that might cause it to sell some assets.

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